Qn. Discuss the doctrine of lifting the Veil and the circumstances under which the veil might be lifted.
A corporation under company law or corporate law is specifically referred to as a legal person, as a subject of rights and duties that is capable of owning real property, entering into contracts, and having the ability to sue and to be sued in its own name. In other words, a corporation is a juristic person that in most instances is legally treated as a person and empowered with attributes to own its own property, execute contracts as well as ability to sue or be sued.
Never the less, there is a major exception to the general concept of limited liability. There are certain circumstances in which courts of law will have look through the corporation that is lifting the veil of incorporation, otherwise known as piercing the veil and hold the shareholders of the company directly and personally liable for the obligations of the company.
The veil doctrine is invoked when shareholders blur the distinction between the shareholders and the corporation. It is worthy of note that although a separate legal entity, a corporation can only act through human agents that compose it and as a result, there are two main ways through which accompany becomes liable in corporate law that is through direct liability (direct infringement) and through secondary liability (acts of its human agents acting in the course of their employment.
It has been observed in DUNLOP NIGERIAN INDUSTRIES LTD. Vs. FORWARD NIGERIAN ENTERPRISES LTD $ FARORE that in particular circumstances for example where the device of incorporation is used for some illegal/improper purposes, l the court may disregard the principle. That a company is an independent legal entity and lift the veil of corporate identity so that if it5s proved that a person used a company he controls for an improper transaction, he may be personally liable to a third party.
The circumstances under which the legislature may lift the veil...